# In the matter of IRAA Clothing Private Limited

> NCLT judgment dated 2023-08-25. Citation: TCN-2023-NCLT-01929. Rajat Textiles, the Operational Creditor, filed a company petition under Section 9 of the IBC,…

- **Court:** NCLT
- **Order date:** 25 Aug 2023
- **Citation:** TCN-2023-NCLT-01929
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/iraa-clothing-private-limited-c98fb39c

## Summary

### Background

Rajat Textiles, the Operational Creditor, filed a company petition under Section 9 of the IBC, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against IRAA Clothing Private Limited, the Corporate Debtor. The Operational Creditor alleged that the Corporate Debtor defaulted in making payments for goods supplied under a 'Demand & Supply' arrangement. The Operational Creditor raised tax invoices for the supplied goods, but the Corporate Debtor failed to make the payments.

## Facts

Rajat Textiles, a partnership firm (Operational Creditor), filed a petition against IRAA Clothing Private Limited (Corporate Debtor) under Section 9 of the IBC, 2016, seeking to initiate CIRP due to unpaid operational debt. The Operational Creditor and Corporate Debtor had a 'Demand & Supply' arrangement since 2017, where the Corporate Debtor would issue purchase orders, and the Operational Creditor would supply goods and raise tax invoices. The Operational Creditor raised multiple tax invoices between 2019 and 2023, totaling Rs. 1,60,81,448.44/-, but the Corporate Debtor failed to make payments. The Operational Creditor sent several emails and reminders, followed by a legal notice dated 31.01.2023. The Corporate Debtor acknowledged the debt in a letter dated

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## Issues and analysis

### Issue 1: Whether the Corporate Debtor committed a default in …

**Ratio:** Section 3(12) of the IBC defines 'default' as non-payment of debt when whole or any part

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**Reasoning:** The court observed that the Corporate Debtor had admitted its liability to pay the

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**Interpretation:** The definition of 'default' under Section 3(12) of the IBC is interpreted to

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**Application:** The Corporate Debtor's admission of liability and the evidence of unpaid

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## Parties

- **Judges:** ANIL RAJ C…; Kuldip Kumar…
- **Appellants:** Rajat Tex…
- **Respondents:** IRAA Clothing…
- **Advocates:** Adv Nausher…; Sand…; +1 more

## Timeline

- **2017-01-01 — Demand & Supply…**: The Operational Creditor and the Corporate Debtor entered into a 'Demand & Supply'…
- **2019-10-10 — Emails Regardin…**: The Operational Creditor addressed several emails to the Corporate Debtor regarding the…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 5(21) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-5)

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